Creating a list of digital accounts and instructions on how to gain access to them is now akin to having a traditional will or a trust in estate planning.
Barron’s recent article entitled “How to Ensure Heirs Avoid a Password-Protected Nightmare” explains that even financial planners may not consider until too late, how difficult it can be to recover and access a loved one’s accounts after they pass away. Since we are much more paperless with our finances, getting access to these accounts can be extremely hard for heirs, if they don’t have the right information. That’s because digital assets and accounts are protected by encryption, multifactor authentication and federal data privacy laws.
Create a list of digital accounts and instructions on how to access them. The list should include not only financial assets but social media and other accounts. Digital accounts that loved ones or advisors may need to access following a death include:
- Traditional financial accounts
- Cryptocurrency accounts
- Home payment and utilities accounts
- Health insurance benefits
- Email accounts
- Social media
- Smartphone accounts
- Storage and file-sharing
- Photo, music and video accounts
- E-commerce accounts
- Subscriptions to streaming services, such as Netflix, newspapers, music services; and
- Loyalty/rewards programs for airlines and hotels.
Create a list of accounts, passwords and access information, keeping it up to date as information changes and letting a trusted person, such as an executor or estate planning attorney, know its location. Without a password list, it can be a nightmare.
Note that with every digital account, there’s a specific process that heirs must undertake to gain access, which should then be communicated clearly in your estate plan. Make a list of all digital assets and their access information, but don’t include this in the will itself, since the document is part of the public record in probate.
Being prepared well ahead of time can help your family avoid additional stress and delays as they probate your estate. It also ensures that they don’t forfeit significant financial assets concealed behind an impenetrable digital wall.
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Reference: Barron’s (Dec. 15, 2021) “How to Ensure Heirs Avoid a Password-Protected Nightmare”